Introduction
The Market Abuse Regulation (MAR) imposes requirements to prevent insider trading, unlawful disclosure of inside information, and market manipulation. The requirements under Article 18 of MAR (Insider Lists) extends to advisors under MAR - for a more detailed answer, you can refer to our article on Your Role as an Advisor under MAR. This brief guide provides a step-by-step navigation through the key areas of MAR compliance.
1. Understanding MAR obligations
MAR, and its subsequent delegated regulations states that advisors must ensure the proper identification and handling of inside information, they must maintain accurate insider lists and oversee timely public disclosures, where the need arises. Advisors are required to maintain their own insider lists as per MAR.
2. Identifying inside information
Inside Information (as defined under the Market Abuse Regulation (MAR)) refers to non-public, precise information that, if made public, would likely have a significant impact on the price of a financial instrument. For a more detailed explanation, you can read more here - Inside Information under MAR.
Checklist for advisors:
- Assess if the information is price-sensitive.
- Confirm the information is non-public.
- Evaluate the potential impact on investors.
Document assessments and keep records of all decisions.
3. Insider list management
Advisors are required to maintain up-to-date lists of individuals with access to inside information. This include the identity, reason for inclusion, and dates of access. Read more on the Format of Insider Lists here. It is also important that advisors use a secure, automated system for insider list updates and access control. You can find out more about the key benefits of the InsiderList platform here.
Best practices:
- Regularly review and update insider lists.
- Notify individuals when they are added to or removed from the list.
- Train insiders on their MAR obligations.
4. Disclosure of inside information
Inside information must be disclosed to the public promptly unless delayed under specific conditions. You can have a look at our article surrounding the Requirements to a Delay a Disclosure should this be the case. You must document the decision to delay the disclosure (InsiderList does this for you through a series of compliance wizards).
5. Market soundings
Market soundings involve sharing information with potential investors to gauge interest before transactions. Advisors must:
- Determine if the information qualifies as inside information.
- Obtain the recipient’s consent to receive inside information.
- Document all communications.
6. Reporting suspicious transactions
Steps:
- Monitor transactions for red flags (e.g., unusual volumes, patterns).
- Investigate and document findings.
- Report suspicions to the competent authority via the Suspicious Transaction and Order Report (STOR).
7. Recordkeeping requirements
Maintain records of:
- Insider lists.
- Decisions related to inside information.
- Disclosures and delays.
- Market soundings and STORs.
Records must be kept for a minimum five years.
8. Training and awareness
Provide regular MAR training to:
- Educate on identifying and handling inside information.
- Clarify reporting obligations.
- Ensure familiarity with tools and systems used for compliance.
9. Penalties for non-Compliance
Non-compliance with MAR can lead to:
- Fines.
- Reputational damage.
- Criminal liability for serious breaches.
Tip: Proactively identify and mitigate risks to avoid penalties.
10. FAQs
Q: What if I’m unsure whether information is inside information? A: Err on the side of caution. Seek legal advice and document your decision-making process.
Q: How often should insider lists be reviewed? A: Regularly, and immediately upon changes in access to inside information.
Q: Can disclosure of inside information be delayed? A: Yes, if conditions under MAR Article 17(4) are met and documented.
Conclusion Advisors are essential in maintaining MAR compliance. By following this guide, you can navigate MAR requirements effectively and reduce risks for your organization.
